HUD Archives: News Releases

HUD No. 22-098
HUD Public Affairs
(202) 708-0685
For Release
May 18, 2022

Federal Housing Administration Announces New "Green Mortgage Insurance Premium" Reductions for Residential Care Facilities Meeting Industry-Recognized Green Building Certifications
Reductions of mortgage insurance premiums for "green" Section 232 Residential Care Facilities supports Administration's environmental objectives and HUD's Climate Action Plan.

WASHINGTON - The Federal Housing Administration (FHA) announced on Wednesday, May 18 that it intends to implement significant reductions in the upfront and annual mortgage insurance premiums ( (MIP) it charges for most mortgage insurance categories under the Section 232 mortgage insurance program for residential care facilities where the facilities meet industry-recognized green building certifications and achieve meaningful, measurable energy and water efficiency improvements. Supporting the Biden-Harris Administration's environmental objectives and HUD's Climate Action Plan, this reduction is designed to encourage owners of skilled nursing homes, assisted living facilities, and board and care homes to adopt higher standards for construction, rehabilitation, repairs, maintenance, and property operations that are more energy efficient and sustainable than traditional approaches to such activities.

"Part of HUD's mission is creating and supporting resilient communities. This action today brings together two forms of resilience: long-term care and energy efficiency," said Deputy Secretary Adrianne Todman. "With today's action, we are lowering costs for achieving modern, energy-efficient facilities that will combat climate change while enhancing the safety and well-being of Americans requiring ongoing care."

As published in the Federal Register ( today, FHA's new "Section 232 Green MIP" will reduce capitalized upfront MIP by 75 basis points, from an existing 100 basis points to a new 25 basis points, for most Section 232 mortgage insurance categories for mortgages on properties that meet Section 232 Green MIP requirements. In addition, FHA will reduce annual MIP rates, which are generally between 45 and 77 basis points, to a new 25 basis points for properties that meet Section 232 Green MIP requirements. On an average FHA Section 232 transaction for an insured loan of $12.5 million, FHA estimates that a borrower will save $93,000 in upfront mortgage insurance premiums on many loan types, and tens of thousands of dollars in annual mortgage insurance premiums depending on the loan type. This significant reduction in mortgage insurance premiums will ultimately lower both upfront and ongoing mortgage debt service costs so that owners committed to maintaining energy efficient facilities can invest capital in their operations.

Section 232 "Green MIP" reductions will apply for new Section 232 mortgage insurance applications where the owner of the facility evidences at application submission to FHA that the property will achieve a specified industry-recognized standard for green building certification and will achieve meaningful, measurable energy and water efficiency improvements. Other requirements include:

  • For properties that have already achieved a specified green building standard certification and that are refinancing with the lower MIP, proceeds must be used to complete further efficiency upgrades and thereby achieve the next-level green certification standards.
  • The property owner must certify that it has achieved, or will pursue, achieve, and maintain a score of 75 or better on the 1-100 ENERGY STAR score, using EPA's Portfolio Manager for the Senior Care Community building type.
  • MIP rates will not be modified on FHA-insured Section 232 loans initially or finally endorsed, in conjunction with Interest Rate Reductions, or in conjunction with Loan Modifications.

FHA plans to finalize and publish its implementation requirements for lenders to begin using the program with their borrowers in the future, with the intent to begin receiving applications that may be eligible for the Section 232 Green MIP reduction later this year.

About FHA's Section 232 Mortgage Insurance for Residential Care Facilities Program

FHA's Office of Healthcare Programs manages the Section 232 Mortgage Insurance Program for Residential Care Facilities which insures loans to finance the construction, substantial rehabilitation, acquisition or refinancing of skilled nursing homes, assisted living facilities, and board and care homes. As of March 2022, FHA had active insurance on more than 3,700 mortgages these facilities across the country with a total unpaid principal balance of $32.5 billion.


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Content Archived: January 2, 2024